Health Insurance Provided by Firms for Retirees Faces Uncertain Future : Aging: Rising costs prompt companies to abandon or reduce benefits or begin charging for the policies.

Few retirees have access to company-sponsored health insurance, and many of those who do are seeing their benefits shrink as businesses try to control skyrocketing costs, a government report says.

“Although seen as a low-cost employee benefit decades ago, retiree health coverage has now become a major concern for companies because retiree health costs have risen and are expected to continue to increase dramatically in the future,” the General Accounting Office reported.

More than 5 million retired Americans are covered by such health plans, of whom 2 million are under 65, the GAO said. Private health coverage is particularly important for younger retirees because people do not become eligible for Medicare health benefits until age 65.

The GAO study was conducted at the request of Rep. Edward R. Roybal (D-Los Angeles), who chairs the House Select Committee on Aging.

The mission was to find out what was happening to health coverage for retirees, said Gary Christopherson, the committee’s director of health legislation. Now that the study has been completed, it is “not as clear that we know what we want to do,” he said.

“At this point, Congress is not clear it’s going to move forward on this,” he said. “They don’t see a way to move without it costing a lot of money.”

The GAO study said retiree health plans are provided by about 4% of companies in the United States. Twenty-nine percent of the 5,550 companies surveyed, when asked why they did not provide retiree health insurance, said there was little or no demand by employees.

The report said that while less than 1% of companies that offer retiree health plans have terminated them since 1984, corporate officials are taking other measures to limit costs, including passing on more responsibility for paying premiums.

“Companies have changed health plan provisions to shift costs to retirees or reduced benefits, and appear to be doing so at an increasing rate,” the GAO said.

The report said that in 1987, more than one-third of the companies who offered retiree health insurance charged their retirees for the coverage. A 1988 independent survey showed, however, that 62% required contributions from retirees under 65; 53% passed on part of the cost to retirees 65 and over, the GAO added.

Christopherson said the few options Congress has available could have negative side effects. For instance, he said, if employers were required to provide health coverage for retirees or Congress tried to make it easier for them to do so, the quality of existing plans could suffer.

“No matter what you gain you’re going to lose as much in return,” he said. “There’s a risk involved.”

The GAO said some companies providing retiree health care coverage might drop the plans if the Financial Accounting Standards Board follows through with a plan to require corporations to show future costs on their balance sheets. The FASB is an independent agency that sets accounting standards for private companies.